A non-European state-owned oil company had taken over the Swiss assets of an international oil company in order to gain a foothold in Europe. A short time later, it became clear that the newly acquired company was experiencing considerable difficulties in obtaining sufficient supplies of raw materials (fuels). As an expert in energy and commodities trading, the interim manager was hired as Head of Supply Strategy & Trading to close the supply gap economically.
Developing and implementing a supply and trading strategy for fuels
The most urgent task was to secure the supply of petrol, diesel, heating oils, kerosene and LPG to meet contractual obligations and supply the retail network in Switzerland. The interim manager took action by clarifying the needs, then approaching the market, talking to potential suppliers and obtaining quotes, comparing offers, negotiating prices and concluding the contracts.
After securing the essentials in this way to ensure the company's survival, the interim manager focused on optimizing trade. He introduced an active mindset and capitalized on market opportunities such as contango structures, product and geographic arbitrage. Overall, an improvement of over five million Swiss francs was achieved.
Introduction of biofuels develops into a profit driver
When the interim manager took on the task, the company was not yet active in the developing market for biofuels. The interim manager convinced the management to include biofuels in the portfolio by demonstrating the benefits and risks of this venture. After receiving approval, he set up the logistics and became active with suppliers, regulators and buyers. Within three years, the expert succeeded in making the company the largest biofuel trader in Switzerland (about a third of the country's total biofuel volume). This led to additional revenue of five million Swiss francs. In addition, the blending of biofuels with conventional fuels increased the competitiveness of the retail system.
Active risk management saves client from major losses
With the takeover of the oil multinational, the company had taken on up to 50,000 m3 of petroleum products. The entire volume was not hedged and was therefore exposed to market risk. To reduce this risk as much as possible, the interim manager set up a professional risk management desk. In close coordination with a specially recruited risk expert, he defined risk limits, set up accounts with brokers and hedged the portfolio by purchasing futures, swaps and options contracts. As it turned out, this protection came just before a major market downturn - and saved the company from a major loss.
